SYDNEY: The wintry chill of economic gloom has reached the traditionally warm and sunny shores Down Under, prompting one of the region's biggest media groups to announce it it is slashing 550 jobs across it publications.

The axe will fall on 5% of the workforce at Fairfax Media - publisher of the Sydney Morning Herald, The Age in Melbourne and The Press in New Zealand - as the company attempts to bolster profits.

Fairfax ceo David Kirk expects to save A$25 million ($21m; €14.5m; £11.5m) in this financial year and A$50m the year after. The redundancies are expected to cost around A$50m.

In a statement to staff he and his deputy, Brian McCarthy, said: "We wanted to make a major change today across the company in order to accelerate our building of a strong and dynamic integrated media business."

The announcement of the job losses came just after Fairfax posted a 47% rise in pre-tax profits for the year to A$386.9m, slightly under analysts' expectations. Revenue was up 34% year on year.

As expected, workers' representatives are dismayed by the cuts and seek talks with the company.

Said Chris Warren federal secretary of the Media, Entertainment and Arts Alliance union: "It's one of the most significant job losses in Australia this year and it's obviously going to have a serious impact on the ongoing quality of the company's papers, magazines and websites in Australia and New Zealand."

The company, which merged with Rural Press in late 2006 and acquired Southern Cross Radio last year, has strongly rejected journalists' fears that editorial standards will slip as a result of the changes.

Investors have welcomed the cuts. Commented analyst Tim Morris: "From a shareholders' perspective, it's positive. They're being proactive in terms of keeping costs under control while the operating environment is facing some headwinds."

In common with media groups across the globe, Fairfax has felt the twin contraction of advertising and circulation revenues as the economic downturn bites and ads and readers migrate online.

Data sourced from Sydney Morning Herald; additional content by WARC staff